Whether you're already retired, nearing retirement, or even if you won't hang up your proverbial work coat for decades to come, chances are good that Social Security will play a role in your financial well-being during retirement. Among current retired workers, 62% rely on the program for at least half of their monthly payout, with 84% of surveyed nonretirees expected to lean on Social Security in some capacity during their golden years.
Given this data, you'd think that ensuring the health of Social Security for current and future generations of beneficiaries would be paramount for lawmakers on Capitol Hill. Instead, the program is inching closer to disaster, according to the 2018 Social Security Board of Trustees' annual report.
Social Security is facing a $13.2 trillion cash crunch
Contained within the latest report was a prognostication no different from the last 33 that came before it: Social Security won't generate enough revenue over the next 75 years to maintain the existing payout schedule. The latest figures call for outlays to outpace revenue collection very soon, with the program's nearly $2.9 trillion in asset reserves being completely depleted by the year 2034.
The silver lining for current and future retired workers is that this doesn't mean the end of Social Security. The 12.4% payroll tax on earned income (up to $132,900 in 2019) and the taxation of benefits will still generate a lot of revenue that can be distributed to eligible beneficiaries. But that bad news is that it means the existing payout, including cost-of-living adjustments (COLA), isn't sustainable. In fact, the Trustees forecast the need to cut benefits by up to 21% in 2034 to sustain payouts over the next 75 years.
Given this data, you'd think that ensuring the health of Social Security for current and future generations of beneficiaries would be paramount for lawmakers on Capitol Hill. Instead, the program is inching closer to disaster, according to the 2018 Social Security Board of Trustees' annual report.
Social Security is facing a $13.2 trillion cash crunch
Contained within the latest report was a prognostication no different from the last 33 that came before it: Social Security won't generate enough revenue over the next 75 years to maintain the existing payout schedule. The latest figures call for outlays to outpace revenue collection very soon, with the program's nearly $2.9 trillion in asset reserves being completely depleted by the year 2034.
The silver lining for current and future retired workers is that this doesn't mean the end of Social Security. The 12.4% payroll tax on earned income (up to $132,900 in 2019) and the taxation of benefits will still generate a lot of revenue that can be distributed to eligible beneficiaries. But that bad news is that it means the existing payout, including cost-of-living adjustments (COLA), isn't sustainable. In fact, the Trustees forecast the need to cut benefits by up to 21% in 2034 to sustain payouts over the next 75 years.
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